Bank of America reinstated coverage early Wednesday of dividend stock British American Tobacco with a buy rating as the firm expects growth opportunities in the company's smokeless tobacco products, another step in Big Tobacco's move to capitalize on new nicotine trends.
The firm's analysts wrote Wednesday that British American Tobacco's new product categories are "transforming the business" and underpinning long-term sales and growth opportunities. Bank of America analysts added that they see meaningful upside potential from tighter law enforcement against illicit vapes in the U.S.
Founded in 1902 and home to iconic cigarette brands like Camel, Lucky Strike and Dunhill, British American Tobacco, or BAT, is making a strategic shift to a smokeless world.
Recognizing that the world and its customers are changing, the company plans to become a predominantly smokeless business by 2035. It continues to expand its lineup of smokeless products like Vuse, Glo and Velo.
Fueled by its strong cash flow and 6.72% annualized yield, British American Tobacco ranks among the best dividend stocks. The quarterly dividend stands at 72 cents.
The company is scheduled to report second-quarter earnings and revenue at the end of July.
Meanwhile, On April 23, S&P 500 component Philip Morris International reported better-than-expected first-quarter profit and sales. The Conn.-based outfit raised its Q2 outlook as its smoke-free offerings, with the popular Zyn nicotine pouch leading the way, were set to boost volumes.
A statement from Chief Executive Jacek Olczak noted revenue growth of more than 20% and a 33% gain in gross profit for the company's smoke-free business.
On Friday, UBS analyst Faham Baig upgraded Philip Morris to neutral from sell with a price target of $170, up from 130. The firm increased estimates following the company's "strong" quarter and guidance raise.
Dividend Stock: BTI Performing Well
British American Tobacco stock advanced 1.6% to 43.55 at the opening bell for Wednesday's stock market action. BTI closed up 1.1% to 42.86 on Tuesday.
The dividend stock is about 4% above a traditional 41.87 buy point from a cup-with-handle base, according to MarketSurge chart analysis. BTI has gained 3.6% in April and 18% in 2025.
Meanwhile, British American Tobacco peer Philip Morris is up more than 40% on the year and enters Wednesday's stock market open number four on the S&P 500 index.
Philip Morris stock has scored two breakouts since October. The stock's early move on Wednesday's steered shares into record highs following a rebound from support at the stock's 50-day moving average.
The nine stocks in the IBD-tracked Tobacco industry group have collectively gained nearly 19% in 2025. The Tobacco industry group is ranked a lofty fourth out of the 197 industries tracked by IBD.
British American Tobacco stock has a 21-day average true range of 2.39%. The ATR metric is available on IBD's MarketSurge charting tool. It gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
There are exceptions, but given current market conditions, IBD generally suggests investors keep most of their portfolio focused on stocks with ATRs at or below 6%.
S&P 500 component Philip Morris has a 21-day average true range of 3.06%.
BTI stock has a 91 Composite Rating out of a best-possible 99. The dividend stock also has a 92 Relative Strength Rating and a 53 EPS Rating.
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